As a realtor I spend a lot of time working with people to prep their finances for such a major financial choice.
When I first got obsessed with real estate, I checked out every book I could find at the Los Angeles Public Library. A handful of these totally changed my mindset (and practices!) on money and got me on the path toward financial freedom.
People always ask me what resources to turn to, so here are my top 5 real estate investing book recommendations!
1. Your Money or Your Life – Vicki Robin & Joe Dominguez
This book breaks down how to track your expenses and calculate your financial freedom goals. Though I love real estate, without this solid financial foundation, it’s easy to just invest aimlessly. This was a transformative book for me because it provided a clear roadmap for how to track my expenses and come up with my financial freedom number.
Without knowing where my money was going, there was no way I was going to be able to track and increase my savings. Personally, I am less of a budget person and more of a tracking person… if I see that one month I spent too much on eating out for example, I can make a change in the next month.
Since reading this book I’ve tried to track my expenses on the first of every month, and it’s been very helpful!
I also track my net worth using the tools in this book, and the most shocking part for me was that my net worth was flat every year until the year I started tracking my expenses and investing in real estate.
This to me is proof that “what you pay attention to grows.”
2. The Millionaire Next Door – Thomas J. Stanley
I love this one because it debunks the myths that millionaires are riding around in fancy cars drinking champagne and eating caviar. Spoiler alert: most millionaires are pretty frugal, live below their means, and have “boring” businesses like plumbing, or car dealership.
It can be easy to focus on being flashy and thinking you need to create the next big tech startup, but often looking “flashy” is actually a sign of a lot of debt —credit card payment, car payment, mortgage payment.
I loved seeing that becoming a “millionaire” is actually kind of boring and you can wear regular clothes… and being frugal is actually one of the best ways to get there.
3. Rich Dad Poor Dad – Robert Kiyosaki
Kiyosaki is part of the canon of real estate, entrepreneurship and investing books. I still remember reading this book on the couch in my apartment and having the epiphany that I could start investing in real estate before I was ready to buy my own house. He was the one that taught me the difference between assets and liabilities.
I think for many people buying a home is the best first step in real estate for various reasons, but for me at that time in my life it made the most sense to stay in our rent-controlled apartment (that we absolutely loved) and keep our expenses low while I was in the middle of a career change.
Another key takeaway from this book was to work in order to learn skills, instead of to climb the career ladder. So now I treat any job as a “paid internship” and an opportunity to learn by doing. That has relieved a lot of the pressure I used to feel in my career!
It has also made it a lot easier to leave something when it no longer feels right, knowing that my earning potential doesn’t come from my job but from the skillsets I am building.
4. CASHFLOW Quadrant – Robert Kiyosaki
As much as I loved Rich Dad Poor Dad, this book was the real winner. It’s more focused on business and investing. Essentially you can be an E, S, B, or I.
E is employee, and S is self-employed. Both of these live on the left side of the cashflow quadrant. You are either working for someone else or working for yourself, but essentially you are trading time for dollars.
B is business, and I is investing. Both of these live on the right side of the cashflow quadrant. In a business you are leveraging your time through people and systems.
As an investor your dollars are out there working for you. There is definitely a time investment in both of these, but it’s not an equal trade of hour for dollar like in a job.
As I have transitioned to running my own real estate business full time, I have kept this book in mind. So even though I am still in the self-employed part, I am setting up my business with systems and processes that will eventually turn it into a B instead of an S. And I am always investing, consistently every year, as much as I can.
This book is a must read for all entrepreneurs!
5. Loopholes of Real Estate – Garrett Sutton
If you are going to invest in real estate and don’t want to lose your shirt, you have to read this book! It basically tells you the common investing pitfalls and ways to mitigate that risk.
I consider myself very risk averse when it comes to investing, which meant that I was very, very scared when I started buying rental property. But I realized that the best way to mitigate risk was to learn about what could go wrong and plan for it! Legal issues, insurance issues, repair issues; there is so much to be prepared for.
For example, when I was buying my first rental property, people told me to be careful because “Sammy, what if the roof needs to be replaced?” Here’s the deal — the roof WILL 100% need to be replaced one day, so you just need to plan for it and keep a cash reserve for capital expenses.
You’ll never be prepared for everything, but this book will walk through some of the main pitfalls to watch out for.
Now that I invest mostly as a passive Limited Partner in syndications, these issues are less relevant, but it has definitely made me a better realtor helping people make smart choices about their investments.